Corporate Scandals' New York Price Tag: $13
Billion

August 20, 2003 (PLANSPONSOR.com) - A New York state
official has put a number on the impact of recent US
corporate scandals on state coffers - a whopping $9 billion
to the state's pension fund and $4 billion in other lost
state revenue.

In a report released Wednesday, State Comptroller Alan
Hevesi said scandals on Wall Street and in the accounting
and energy industries over the last two years were
responsible for a $2.9-billion hit to the state’s economy,
the Associated Press reported. Hevesi also said the
scandals ate into state tax revenues by $1 billion.

With some of the scandal-plagued companies located in
New York City, the city bank accounts also suffered a hard
slam. Hevesi said New York City lost $260 million in tax
revenue and $7 billion from the city public
pension
system’s value – mostly because of lost jobs and stock
value.

On an individual basis, the comptroller estimated that
the scandals cost a New Yorker in his or her 50s or 60s
more than $10,000 in investments in 401(k) programs or
other savings plans . New Yorkers in their 40s lost an
average of $8,000.

“New York was hurt particularly hard,” said Hevesi,
according to the AP. “When the stock market declines, that
hurts the financial markets, a key industry. And every unit
of government, the state and every single county, town and
village, faced reduced revenues and higher costs.”

He said that calculating the cost is critical to finding
ways to enact strong measures to avoid such scandals and
subsequent financial collapses, which took commerce and
jobs with them.
Hevesi determined the state’s cost by taking a
fraction of the $35 billion nationwide loss that the
Brookings Institution blamed on the scandals in a 2002
report. Hevesi said the state’s economy is about 8.4% of
the national economy.